Up until now, this series only focused on all the great parts of Amazon, telling you that you could be the next person to earn a million dollars overnight with the right product and strategies – but it’s time to get real with you. There are a bunch of costs for starting an Amazon FBA business and for selling products and with those costs come risks. In this post, I will fill you in about the costs involved as well as how to set up an Amazon Account. Before proceeding with Part 3, you might want to catch up with Part 1 and Part 2 which explain a bit about what Amazon FBA is and how to source the right products to sell.
How To Set Up An Amazon Seller Account
The best thing about Amazon is that anyone, no matter where in the world you are located, can create an account and start selling.You can even sell on Amazon if Amazon is not available in your country as long as you comply with the tax regulations of your country. Signing up for an Amazon Seller account is easy and free if you choose to be an individual seller. If you’re ready to get the ball rolling, you can find the link to sign up HERE.
Amazon Seller Account Fees
Individual Seller Account
Small businesses selling under 40 products a month
€0.99 Per Item
Professional Seller Account
Established businesses selling over 40 products a month
€0 Per Item
- Please note that the listing fee is not for the number of products listed. It is a fee that is paid every time a product is sold.
- With an individual listings account, you will have to create listings manually in the Amazon Seller Central dashboard.
- With an individual account, you are limited to certain categories. Read about the different categories HERE. Nevertheless, there will be tons of products to choose and sell.
Costs For Starting an Amazon FBA Business
If you decide to start an FBA business, which I suggest instead of a traditional shipping business, you will have to pay fees for Amazon’s services. The following factors influence the amount you will have to pay:
- Shipping, handling, and storage fees
- Type of product you sell (mattress vs. make-up brush).
- Amazon referral and sales fees
There are two different types of fees that Amazon charges:
- Fulfillment fees (per unit): Fulfillment fees include picking up and packing your orders, shipping and handling them, customer service, and product returns.
- Monthly inventory storage (per cubic foot): This fee is charged for all your products that will be stored in an Amazon Fulfillment center based on the calendar month and your daily average volume.
Pro tip: It is slightly cheaper to store your products in the Amazon warehouse from October until December than it is during the other months of the year. You can easily check what to expect with fees depending on the types of products you sell by checking here.
Amazon Referral Fees
The one fee that can get rather costly if you have a cheap selling product is the referral fee. Sellers are required to pay a referral fee for each item sold on Amazon. Some products, such as watches, even have a minimum referral fee. There are two things that determine your referral fee:
- The product category
- Your selling price
On average, sellers pay a 15% referral fee, however, fees can range from 6% up to 20% depending on the product category. You can learn more about referral fees on Amazon’s website here. If you checked the link, you’ll have noticed that most products have a minimum referral fee of $1.00, with the exception of watches and jewelry. Those have a $2.00 referral fee.
10% of your sales price may not seem much but you should definitely not forget to calculate this into your costs when you set your sales price.
Taxes from Your Home Country and From China
This is one of the trickiest parts, which, unfortunately as a business owner, you have to manage yourself. The taxes from your home country should be relatively easy to manage, but the taxes you will receive from China will be rather complex. I suggest you do some digging as well as consider hiring a freight forwarding company to manage all your taxes for you. This way you won’t receive any nasty surprises.
If You Are Successful on Amazon, You Won’t Make Any Money
Reading this you might be like: what?! But the hard truth is that you won’t make a dime on Amazon if you are successful and you’ll love it. The reason why? All successful Amazon sellers tend to reinvest all their earnings back into their business. Every month, you should see an increase in your assets. You’ll have more varieties of products to sell, more inventory available – you’ll have a business that will be generating real and consistent revenue every month and it’ll be running like clockwork.